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Apple and pulse oximetry company Masimo have been engaged in a legal battle for the past two weeks. Masimo has accused Apple of stealing trade secrets and poaching employees for the development of the Apple Watch. The dispute has been largely kept under wraps, with some parts of the trial sealed by the overseeing judge. However, legal affairs journalist Meghan Cuniff has shared some details on what the two sides are arguing over in court.
Masimo believes that Apple developed five pulse oximetry patents using trade information stolen from the company. Masimo is seeking co-ownership of the patents and a payout of $3.1 billion. This is not the first time Masimo has targeted Apple with patent infringement claims. However, the United States Patent and Trademark Office invalidated all but two of the patents, prompting Masimo to turn to allegations of theft of trade secrets.
Masimo claims that Apple deliberately stole employees and that Cercacor Chief Technical Officer Marcelo Lamego shared secret Masimo information with Apple. Apple maintains that the hiring of Lamego and Masimo Chief Medical Officer Michael O’Reilly was based on their talent and had nothing to do with their prior experience at Masimo. Apple further argues that the former Masimo employees did not divulge Masimo’s intellectual property rights when they worked on the Apple Watch, despite Masimo’s accusations.
Lamego, who was hired at the recommendation of O’Reilly, filed for 12 patents in his six months at Apple and was named as an inventor on several future Apple patents. He worked on the same kind of sensor that he had worked on at Masimo, which has been a point of contention for Masimo. Lamego claims that when he worked on the Apple Watch’s heart rate detection algorithm, he had to “exercise extra care to avoid IP conflict”. Lamego said that his work for Apple was stunted after Masimo sent a threatening letter not long after his hiring, which caused Apple to pull back on the resources provided to him. He ultimately left, but Masimo maintains that what he shared with Apple during that time was instrumental to the development of the Apple Watch.
Prior to when Lamego worked at Apple, the company faced development challenges with the Apple Watch. Apple executive Bob Mansfield wrote that the sensor was a “mess” and would “fail” on its “current path”. Apple vice president of corporate development Adrian Perica also expressed concerns about the device, writing that the Apple Watch was “already way behind” other wearables on the market.
Masimo presented emails between Mansfield and Perica, who discussed acquiring Masimo during the time period when the Apple Watch was in development. Apple decided against it because the company’s large size wasn’t “Apple’s style” and wouldn’t “accelerate Apple’s roadmaps and products”, according to Perica. Perica at one point referred to extending an “olive branch” to Masimo by offering tickets to an Apple event, which Masimo lawyers cited as evidence that Apple knew it had wronged Masimo in some way.
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Apple claims that Masimo is targeting it with the lawsuit because Masimo saw the success of the Apple Watch and decided to make its own smartwatch. Masimo has largely been focused on large medical devices created for hospitals rather than wearables. In a trial brief, Apple said that what Masimo claims are “trade secrets” are ideas “long known and used by multiple companies.”
The eight-person jury hearing the case is expected to begin deliberations as soon as next week as Apple and Masimo finish their legal arguments. Apple is also fighting a ruling by the U.S. International Trade Commission that the company infringed on Masimo patents with the Apple Watch.
